Sibos 2010 Amsterdam

Accord - Update & Case Study

Jan Dings, SWIFT

Dennis Sweeney, Newedge Group UK Branch

25 October 2010

Accord overview…...and then there were two!

• SWIFT’s confirmation matching service• One of the first financial SaaS (Software as a Service)• Covering 2 areas

– Accord for Treasury (MT 3xx/600)– Accord for Securities (MT 515)

• Radically different models, one shared infrastructure

Accord: A Family of ServicesSame infrastructure – different service structure

Treasury Securities

Flow model Messages exchanged between the parties, are copied to Accord

Both parties submit messages directly to Accord

Choice Individual: each party takes own decision as to how matching is done (Manually, on Accord, or on local application)

Collective: both parties must be Accord users, to obtain a match

Reporting / integration

Exclusively Real-Time, in pull mode• GUI for operators• InterAct based API, for integration

• Real time towards GUI• FIN-based reports at 15

minutes intervals for integration in back-office applications (push mode)

Accord for Securities - Short Intro

Accord for Securities – Prime/Executing BrokerSolution for hedge fund transactions

Hedge Fund Executing Broker

Prime Broker

Daily Trade report

1. Automated pre-matching,

2. Real time status updates + exception handling on GUI + full

reporting in MT 998

4. Settlement OK

MT515

MT515

MT 998

MT 998

Custodian

Custodian

Agent AgentCSD (PSET)

2. Real time status updates + exception handling on GUI + full

reporting in MT 998

3 . PSET agents’ local code is x-ref to a BIC

in Accord

Accord

Broker

Global

Custodian

Local

Custodian

Local

Custodian

CSD

Settlement OK

[3]

[1]

[2]

1. Broker A trades off exchange with Broker B

5. Accord sends match status updates via (MT998)

[5]

[6]

7. CSD agents’ local code is x-ref to a BIC in Accord

2. Broker A copies trades + settlement info in MT 515

3. Broker B copies Trade & Settlement details in MT 515

4. Accord matches (MT 515) to (MT 515)

[4]

[5]

6. Brokers instruct settlements (MT 54x)

[6][7]

Broker

Accord X-ref table

Accord

MT

515

MT515

MT 998

MT

99

8

Accord for Securities – Broker to BrokerSolution for off exchange transactions

Accord for Securities – Upcoming DevelopmentFeeding Central Counterparties (by Q2 2011)

LCH.Clearnet SWIFTMessaging

Accord

Off-exchange Trade

Confirmation to Accord + match status to

Broker

Matched trade details to CCP

SIX x-clear

EuroCCP

Broker

Confirmation to Accord + match status to

Broker

Broker

Accord for Treasury - UPDATE

Accord for TreasurySingle-slide overview

Accord Subscribers (>475 in 70 countries) • Banks• Brokers • Custodians• Fund mgrs • Corporates(strong growth)

Accordsubscriber ornon- subscriber

• Real-time reporting & exception handling• Integration available for various Back-Office Systems

DealConfirmations:

(MT 300,305,306,320, 330,340,341,360,

361,362,392, MT 600)

Accord• Real-time Confirmation Matching Service • Availability of >99.97% last 5 years• >90K msgs/hour observed matching capacity• Common matching rules + user-defined rules• Financial Liability for Matching results

Copies ofconfirmations

Copies of non-SWIFT data: fax, e-mail, e-FX portals, Broker feeds, Reuters, etc.

SWIFT

Exception Handling using Graphical Interface

Archive Access(e.g. auditor)

Back Office Integration using XML-based API

Accord Central Server

SWIFT

Alliance Gateway

Live DB: confirmations, matching results, operator actions, history, audit trail

Long Term Archival: 11 year online archive

Accord Central Server

Alliance Access

or

Branches / Headquarter accessing their own data, or dividing the work between them

GB

AE

DE

Connectivity: direct or via Service Bureau

Accord for Treasury Accord from the customer’s perspective

Accord Update and Case Study - Sibos 2010

Total overhaul will start in 2011

– research phase ongoing.

Mission: create the best possible

matching system

Accord for Treasury Product Evolution

Accord for Treasury – Update 2010 2/4Extending Accord into Commodities

• MT 600: Commodity Trade confirmation– Traditionally limited to Gold/Silver, the Standard for

MT 600 now allows for base metals, palm oil– Avoid confirming commodity trades with MT 300 containing CCY

code XAU!• Matching on Accord scheduled for delivery in Q4 2010

– Matching rules agreed with members of a Commodities working group

• Same architecture as Accord for Treasury: messages exchanged with counterparty, and copied to Accord

Accord for Treasury – Update 2010 3/4Multi-matching for allocations

• Sophisticated Many-to-Many matching for complex allocation scenarios

• Optional Accord add-on module, currently tested with leading FX Broker

• Capable of: – Assigning matched status to sets of n messages sent with m messages received, for the same trade, where the two parties involved indicated the allocation in different ways

– Interpreting reversed trades sent by one party as equivalent of cancellation sent by other

– Flexible rounding mechanism – Very user-friendly reports

Accord for Treasury – Update 2010 4/4New Training and Consultancy offerings

• New customers joining Accord service• Accord Business Training for New Users

• Refresher consultancies• Accord refresher (staff rotation, new functionality...)

• Accord for Supervisors (workflow, control, team optimisation)

• Making the most of Accord (less known, advanced features...)

• Usage optimisation• Accord Health Check - Optimise your Treasury Operations

• Rich usage statistics generated & explained by Accord expert• Peer comparison + own evolution • Pinpointing internal / external root causes +

action plan to address problems• 3 year contractNEW!

NEW!

Accord for Treasury – Plans for 2011 Preparing for the total overhaul

• Further GUI enhancements• GUI migrated to WebPlatform to ease installation:

1 single, serving all users

SAB-1

Accord GUI-1

SAB-2

Accord GUI-2

SAB-3

Accord GUI-3

SAB-...

Accord GUI-...

Web Platform

Accord GUI

Accord for Treasury Case Study - Newedge

Newedge Case StudyTimeline -1

• 3Q-4Q 2007:Initial contacts with Fimat. Contract with matching solution up for renewal early 2008. Advantageous Accord pricing through traffic aggregation with Société Générale group

• January 2008: – Fimat becomes Newedge– Accord activated in parallel with existing solution– Newedge allocation pattern requires immediate specific solution– SWIFT designs and delivers semi-automated solution

• February 2008: – Solution validated – tested in parallel with previous solution,

Accord appears to be significantly faster– Accord + Excel program becomes standard solution

Newedge Case StudyTimeline -2

• Q2-2008:Accord Brick Pricing introduced. Cost of matching FX/MM Accord drops drastically for larger customers / groups

• 2009:Fully automated “Multimatching” solution designed in discussionwith Newedge

• 2010:Gradual overhaul of Newedge SWIFT infrastructure– Multi-Matching solution developed for new infrastructure

• September 2010:Fully automated version deployed at Newedge, realising significant further efficiency gains

MultiMatching ProgrammeFeatures and demo

• A standalone, fully automated black box program using Accord API

• For allocated trades: assigns matched status to sets of n MT300 sent with m MT 300s received, for the same trade

• Understands reversed trades sent by one party as equivalentof cancellation sent by other

• Flexible rounding mechanism

• Very user-friendly reports

Overview of un-matched items, including allocations

NEWGGB2LXXX

Execute the multi-matching application

NEWGGB2LXXX

Multi-matched (allocated) items disappear from the listof items that require manual intervention

NEWGGB2LXXX

PDF reports are available and provide a full audit trail

Questions & answers

?

Thank you